Governor Andrew Bailey asserted that a stablecoin used as a means of payment on a broad basis should enjoy access to central bank facilities and depositor protections. That, he said, would effectively force stablecoin issuers into a regulatory classification closer to that of standard banks. He also confirmed that a consultation paper would be published in the coming months outlining how the Bank plans to bring such tokens into the monetary architecture.
The Bank’s sharper tone comes amid a push by regulators globally to bring digital assets under stricter oversight. In the UK, the Financial Policy Committee recently reviewed developments in stablecoin markets, emphasising the need for proportionate international alignment given the sector’s cross-border nature.
However, that seemingly rigid approach is now being tempered by internal adjustments. The Bank plans to introduce carveouts to proposed limits on stablecoin holdings by firms, particularly crypto exchanges that require substantial token reserves. Those waivers aim to balance market functioning with regulatory control. Such a shift is perceived by some observers as signalling that the Bank is moderating a formerly hardline posture.
Under the original design, stablecoin holdings caps were mooted in ranges of £10,000–20,000 for individuals and up to £10 million for business entities. Critics argued these thresholds would stymie real-world use and liquidity in the digital asset infrastructure. Exemptions under consideration would allow firms with system-critical operations to operate above those caps under supervisory oversight.
Industry reaction has been lukewarm. Some firms welcomed the possibility of exemptions but questioned the clarity around which entities might qualify and under what criteria. Others warned that the lingering uncertainty continues to dampen innovation, especially for projects seeking to anchor payments or settlement on stablecoin rails. One executive described the move as “a pivot, not a breakthrough,” noting that many questions about enforcement and technical implementation remain unaddressed.
The regulatory dynamic is further shaped by the Financial Conduct Authority, which is running consultations on stablecoin issuance, custody, and consumer protections. The FCA’s proposals include strict governance requirements, reserve backing mandates, and detailed redemption conditions for issuers. Final rules are slated to emerge by 2026.
Global regulatory developments furnish additional pressure. In the U. S., the GENIUS Act now imposes federal rules on stablecoins, while the European Union is nearing full implementation of the MiCA regulatory regime. As these frameworks take shape, the UK risks falling behind if it delays or overregulates.
Supporters of the Bank’s thrust argue that stablecoins, if left ungoverned, present latent risks to monetary integrity, systemic confidence, and credit intermediation. Without proper safeguards, they contend, token-based money-like instruments could disintermediate banks, destabilise deposit bases, or amplify contagion in stressed markets. Detractors worry that excessive regulation may stifle fintech development and drive innovation offshore.
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Cryptocurrency